Cryptocurrency experts predict an imminent collapse of the cryptocurrency market

The cryptocurrency industry may face serious problems. According to Jamie Dimon, CEO of the financial giant JPMorgan, the crypto sector is not ready for the worst-case scenario of rising interest rates in the US to 7%, which is forecasted for 2024. The expert suggests that the digital asset industry may be hit harder than others.

According to Daimon, the Federal Reserve may continue to raise rates to cope with inflation. Future increases in borrowing costs are likely to cause even more damage to the global economy. In this case, the crypto sector will also suffer significantly.

«The transition from 0 to 2% was almost invisible. The movement from 0 to 5% took people by surprise, but if the growth continues, it could be a collapse for the entire system,» said Daimon. — «I'm not sure if the world is ready for 7%. If they [ФРС — ред.] are going to have lower volumes and higher rates, there will be a strain on the mechanism.»

A 7% rate combined with stagflation and massive unemployment would significantly increase the risk of the US economy falling into recession. This is an undesirable scenario for risky assets, such as technology stocks and cryptocurrencies. In addition, further tightening of monetary policy will push US Treasury yields to multi-year highs.

Daimon’s comments contradict the widespread belief that the Fed’s policy tightening cycle has reached its peak.

Since March 2022, the Federal Reserve has raised borrowing costs by 525 basis points. It rose to the range of 5.25%-5.5%. The cycle of repression and liquidity tightening was one of the reasons for last year’s cryptocurrency market crash, along with the bankruptcy of the FTX cryptocurrency exchange and the fall of the Terra (LUNA) project.